A Malaysian parliamentary inquiry has slammed the board of state fund 1MDB for being irresponsible and urged a probe into its former chief, but stopped short of implicating Prime Minister Najib Razak who was an adviser to the troubled firm.
Parliament’s public accounts committee (PAC) said on Thursday senior management at 1Malaysia Development Bhd withheld crucial information from the board and made transactions without its knowledge or approval.
The bipartisan PAC is the first Malaysian entity to level allegations against 1MDB, which is at the centre of corruption and money-laundering investigations in the United States, Switzerland, Singapore and Luxembourg.
US Department of Justice officials have asked Deutsche Bank AG and JPMorgan Chase & Co to provide details on their dealings with 1MDB, as the global investigation into 1MDB widens. Goldman Sachs’ relation with 1MDB is also under review.
The 1MDB fund, which had piled up more than 42 billion ringgit ($A14 billion) in debt since its inception in 2009, said its board of directors had collectively offered their resignations after the report.
The parliamentary report said former 1MDB CEO Shahrol Azral Ibrahim Halmi had to take responsibility.
“As such, enforcement agencies are asked to investigate Shahrol Azral Ibrahim Halmi and anyone else related,” the report said.
The executive board of the fund offered their resignations after the report was released.
It called for the advisory board of the fund – chaired by Prime Minister Najib Razak – to be abolished and any reference to the prime minister be changed to finance minister in the company’s memorandum and articles of association.
Najib, who founded 1MDB in 2009, was not otherwise named in the report. Najib has consistently denied any wrongdoing. He said the report showed that allegations by former Malaysian premier Mahathir Mohamed against him were false.
Mahathir quit the ruling party in February and has stood with the opposition in calling for Najib to resign over the 1MDB scandal, which has fuelled a sense of crisis in a country under economic strain from slumping oil prices and a prolonged slide in its currency last year.
Shortly after the report was released, opposition leader Tony Pua, who was part of the PAC, told a news conference Najib should at least be held culpable for the mismanagement at the fund.
Pua lamented the failure to get crucial information on 1MDB’s foreign banking transactions. The report did scrutinise several overseas transactions that it said were made without 1MDB board approval.
One was a $US700 million ($A920 million) transfer to an account belonging to a company named Good Star Ltd. Another unapproved transaction of $US300 million was made to 1MDB PetroSaudi Ltd, a joint-venture company set up in the British Virgin Islands.
The report also said billions of dollars in unexplained payments were paid to a company called “Aabar Investments PJS Ltd (Aabar Ltd)” in 2012 without board approval.
The report said 1MDB had not clarified whether Aabar Ltd was a subsidiary or linked to an Abu Dhabi sovereign wealth fund called Aabar Investments or another Abu Dhabi fund called International Petroleum Investment Corp (IPIC).
The Wall street journal, citing documents from international probes, said investigators believed around $1 billion moved through state agencies, banks and companies linked to 1MDB before eventually finding its way into Najib’s personal accounts.
The 1MDB fund has denied any of its funds went to the prime minister. The Attorney-General cleared Najib in January of any corruption or criminal offences, saying the $US681 million was a gift from a member of Saudi Arabia’s royal family and that most of it was returned.